Industrial policy Resolution, 1948 of Industrial Policy in India

The main features of the Industrial Policy Resolution of 1948 may be summed up as under

(i) The role of State enterprise vis-a-vis private enterprise. The basic principle embodied
in the policy was that State must play a progressively active role in the development of
industries. It was, however, duly recognised that in the circumstances then prevailing in the
country, it was not advisable for the State to take over existing units and it was, therefore,
decided to concentrate on new units and existing units already under its control. The private
sector was to be properly regulated and directed and was assigned an important role in the
situation then obtaining in the country.

(ii) Allocation of industries to private and public sectors. Keeping in view the broad
principles enunciated above, the Policy Resolution divided the industries into the following four
categories for the purposes of their allocation as between private enterprise an State
enterprise:

(a) Strategic an basic industries. The manufacture of arms and ammunition, production and
control of atomic energy, and the ownership an management of railway transport were made
the “exclusive monopoly of the State”. These industries were even earlier, wholly in the public
sector.

(b) Basic and key industries. These included coal, iron and steel aircraft manufacture, ship-
building, manufacture of telephone, telegraph and wireless apparatus, etc. The existing units in
these industries were to be allowed to continue in the private sector for a period of ten years at
the end of which the position was to be reviewed and the question of nationalization was to be
decided, if necessary. As for the new units it was laid down that the State would be exclusively
responsible for their establishment.

(c) Private sector industries subject to control and regulation by the Government. In
this category were placed twenty important industries of the country which were to continue in
the private sector though they were to function subject to control and regulation by the
Government. These industries included heavy chemicals, sugar, cotton and woollen textiles,
cement, paper, salt, machine tools, etc., all of which were considered important in the national
interest.

(d) The private and co-operative sector industries. The rest of the industries not covered
by any of the categories mentioned above were to be private enterprise-individual as well as
co-operative-though they were to be under the general control of State.

(iii) The rule of small-scale and cottage industries. The Policy Resolution afforded due
recognition to the importance of small-scale and cottage industries in the economy of the
country. It was visualized that they would be organised on co-operative lines and would be
integrated and coordinated with large industries.

(iv) Steps toward better Industrial relations. In keeping with the recommendations of the
Industries Conference of 1948, the Industrial Policy Resolution of 1948 accepted profit-sharing
and other schemes meant to associate labour with the management of industry as steps in the
direction of more cordial Industrial relations in the country.
 Objective of Industrial Policy
Objective of Industrial Policy

The main features of the objectives of the Industrial Policy of the Government of India may be classified as
follows:

• to maintain a sustained growth in productivity;

• to achieve optimal utilization of human resources;
• to enhance gainful employment;
• to attain international competitiveness, and
• transform India into a major partner and player in the global arena

The Industrial Policy concentrates on deregulating Indian Industry, allowing the industry freedom and flexibility in
responding to market forces and providing a policy regime that facilitates and fosters the growth of Indian
Industry.

The Industrial policy of India was announced by the Central Government in the Resolution No. 1(3)-44(13)48 on
6th April, 1948 and was later approved by the Central Legislature. It aimed to centrally control the development
and regulation of a number of important industries which affected the economy of the whole country and the
development of such industries needed to be governed by the economic factors of all-India import. Thus, the
Industries (Development and Regulation) Bill was introduced to achieve this objective. After being passed by
both the Houses of Parliament, the Bill received the assent of the President on 31st October, 1951. Finally, it
came into force on 8th May, 1952 as The Industries (Development and Regulation) Act, 1951 (65 of 1951). This
Act seeks to secure the planning of future development on healthy and balanced lines by the licensing of all new
undertakings by the Central Government. The Act confers power on the Government to make rules for the
registration of existing undertakings to regulate the production and development of industries in the First
Schedule and consultation with Provincial Governments on these matters. The Act also provides for the
constitution of a Central Advisory Council. Prior consultation with the Central Advisory Council would be
obligatory before the Central Government takes measures regarding revocation of a license or taking over the
control and management of any industrial concern. The Industries (Development and Regulation) Act, 1951 has
undergone several amendments from time to time which are mentioned hereunder:

• The Industries (Development and Regulation) Amendment Act, 1953 (26 of 1953).
• The Industries (Development and Regulation) Amendment Act, 1956 (71 of 1956).
• The Repealing and Amending Act, 1957 (36 of 1957).
• The Industries (Development and Regulation) Amendment Act, 1961 (51 of 1961).
• The Industries (Development and Regulation) Amendment Act, 1962 (37 of 1962).
• The Industries (Development and Regulation) Amendment Act, 1965 (6 of 1965).
• The Industries (Development and Regulation) Amendment Act, 1971 (72 of 1971).
• The Industries (Development and Regulation) Amendment Act, 1973 (67 of 1973).
• The Industries (Development and Regulation) Amendment Act, 1974 (32 of 1974).
• The Industries (Development and Regulation) Amendment Act, 1979 (17 of 1979).
• The Industries (Development and Regulation) Amendment Act, 1984 (4 of 1984).

• The Delegated Legislation Provisions (Amendment) Act, 1986 (4 of 1986).